For Sunday, July 4, 2010                                             Go to Website
	Current Strategy Positions   2008 Full Year Results Fibtimer Timing + 17.3 % S&P 500 Index    - 39.9 % 2009 Full Year Results Fibtimer Timing + 59.5 % S&P 500 Index  + 24.7 % 2010 to July 2  Fibtimer Timing  + 1.2 %  S&P 500 Index    - 9.2 % FibTimer currently has 12 successful strategies   S&P 500 Position -        BEARISH   Nasdaq 100 Position - BEARISH   Gold Stocks Position -  BULLISH   SmallCaps Position -   BEARISH   U.S. Dollar Position -    BULLISH   Bond Fund Position -    BEARISH These positions were started over previous weeks. You need a paid subscription for real time signals. Sector Funds, ETF and Stock positions are not included above.

Last week we wrote:

"After several weeks of bottom building and multiple bullish indicators, this last week was not what we were looking for. To be sure, it could be just a single bad week and considering the volatility leading up to it that may very well be the case. There have been seven steep and fast swings in the market since the "flash crash" back in early May. Look at the daily chart below. It has been amazingly volatile."

This week:

The extent of the selling this week has been not only dramatic, but also devastating to the prospects of a stock market advance.

There were several promising bullish indicators triggered over the past month, not the least of them being the four better than 9 to 1 up volume vs. down volume days on the NYSE. These are very unusual days and in the past have indicated a change in sentiment from bearish to bullish.

But to our knowledge this bullish indicator was never followed by such fast and steep declines.

Our take on this is; we need to take a step back, clear the table, and start from scratch. Based only on the chart action there is little to indicate we have higher highs ahead. The markets are very oversold and could bounce in the short term, but the trend now is down.

This strategy, as well as most of our strategies, is in cash positions to protect capital. The extreme volatility does not lead us to trust even to a bear fund position. The current volatile markets could just as easily have a short covering rally that would result in bear fund losses.

There has been a huge amount of technical damage.

The S&P 500 Index - SPX has broken below the February correction lows. This level has acted as support that stopped two selloffs, and created what appeared to be a solid double bottom.

The daily chart below shows this support clearly. But this week that support, at SPX 1044.50, was quickly and decisively broken

The next support level can be seen on the weekly chart at SPX 1002.24. This is the 61.8% retracement support for the advance from the July 2009 correction lows.

It is also important because the SPX 1000 level is an attention getter. If the SPX closes below this round number, it will make headlines on every news channel, internet news site, and will also cause chills in every investor who watches charts.

If the SPX 1000 level breaks, the new target for this decline will be SPX 869.31 (see weekly chart below). That is almost 17% below current levels and we would be in a new bear market if this level is reached.

We could very well bounce next week considering how oversold the markets are, but after that bounce, it is hard to imagine this very damaged stock market continuing higher.

The declining 50-day moving average has reached the 200-day moving average. It will cross next week no matter what the markets do and that is a bearish indicator for many investors. The SPX is far below both these averages.

Last week we wrote, "next week is critical" and the stock market has answered with a decisive decline.

The CBOE Volatility Index - VIX rose this week, touching the 37 level.

Considering that VIX almost reached 50 in May and we are now at "much lower" lows, this indicates a "lack" of fear. That is bearish. We would have expected VIX to be at new highs considering how far the markets have declined.

Conclusion:

The SPX is currently below its 50-day moving average. The 50-day average has turned lower. The SPX is now below its 200-day moving average. The 50-day average will cross below the 200-day average next week.

We have had "four" rare and bullish breadth explosion days. Typically two within two months marks the beginning of a bullish advance. The stock market has ignored these hugely bullish days and is now considerably below all of them. That in itself is bearish.

The double-bottom we had been watching has been broken to the downside. A very bearish indicator.

Over the coming weeks we should see lower lows, though in the short term the oversold conditions could result in a bounce.

The SPX portion of this strategy is in a BEARISH cash (money market funds) position.

S&P 500 Index (SPX) Daily Chart

S&P 500 Index (SPX), Weekly Chart

Nasdaq 100 Index (NDX) Chart Analysis

Last week we wrote:

"After the reversal the NDX declined every day this week and also triggered a go-to-cash signal for [last] Friday. This move is to protect capital due to the high degree of volatility and the reversal from what looked like a solid advance."

This week:

The Nasdaq 100 Index - NDX has broken below the double bottom we were watching as a bottom for this correction, and has reached NDX 1712.89.

This is the February correction low, and for the NDX it has held. We would not read too much into this though as the SPX is well below the same level.

This week the NDX traded below, and closed well below, its 200-day moving average. A bearish indicator for many investors who watch this level as the start of a bear market.

The NDX has declined every day for the past ten trading sessions. That is very unusual and probably there will be some upside early next week

Such oversold conditions tend to reverse. The below chart shows a gap that was created at the open on Tuesday of this week. Gaps are often, though not always, filled. The gap is also right at resistance levels so any snap-back rally will hit this quickly.

The odds are that a bounce will end at the gap and the resistance levels shown in the below chart, assuming we do bounce. This week was ugly and could instead be followed by lower lows and panic selling when the markets re-open on Tuesday.

But we will be looking for a bounce.

Conclusion:

The NDX is below its 50-day moving average. The 50-day average is declining. The NDX is below its 200-day moving average.

The NDX had a well defined double bottom in place and this week that double bottom was broken. This is a very bearish indicator.

The NDX stopped right at its February lows and this could result in a bounce early next week. But the SPX is well below its February lows and the technical damage to the stock market is such that we do not see any bounce lasting for long.

The NDX portion of this strategy is in a BEARISH position. Aggressive timers should be in CASH (money market funds)